The End to Agency Deference in Florida Tax Disputes [Florida]

Many a Florida taxpayer has disagreed with the Department of Revenue’s interpretation of a tax statute. I recently was involved in an audit where it was clear to us that the Florida Administrative Code provisions were not supported by the statutory provisions.

A taxpayer seeking to challenge the DOR’s interpretation in court have had the deck stacked against them under the concept of agency deference. This gives the DOR the benefit of the doubt in its interpretation of the law – court’s will typically defer to the DOR’s interpretation on the theory that the DOR is an “expert” in tax matters.

In great news for taxpayers, those days are now over. Recently approved Amendment 6 to the Florida Constitution adds new Section 21 to Article V of the Florida Constitution. This provision reads:

Judicial interpretation of statutes and rules.—In interpreting a state statute or rule, a state court or an officer hearing an administrative action pursuant to general law may not defer to an administrative agency’s interpretation of such statute or rule, and must instead interpret such statute or rule de novo.

In other words, agency deference is now dead in Florida. This will assist taxpayers in deciding whether to comply with an administrative code provision, in negotiating with the DOR during an audit, and in litigating with the DOR in court, if they believe a DOR pronouncement or interpretation of the law is erroneous.

This new provision also has important implications outside of the tax arena, but of course that is not our interest here.

The fate of agency deference at the federal level is also under fire in federal courts these days – it will be interesting to see what develops there, including in the U.S. Supreme Court. If only we could get a similar amendment into the U.S. Constitution!